Smart Voice-Activated Assistants Outlook
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
- Sustainable Growth and Tech Trends
- Emerging Technologies
- Digital Transformation
Publication | Update: Sep 2020
Smart assistants have opened a new page in human-machine interaction. Advancements in voice recognition, natural language processing, and improved connectivity have made voice control of electronic appliances and smart devices increasingly mainstream. Ross Barrows, Head of Citi’s Australian Small Cap Research Team, believes that we are at the tipping point for user interfaces with the emergence of voice-based digital assistants such as Amazon’s Alexa, Apple’s Siri, Google’s Now, Microsoft’s Cortana, etc.
Smart Assistants or Virtual Personal Assistants require advanced speech recognition and speech synthesis algorithms in order to comprehend and respond to commands.
Powered by Artificial Intelligence
The emergence of Smart Assistants has been made possible by advancements in artificial intelligence (AI). The McKinsey Global Institute estimates that deep learning techniques (focusing on three neural networks: feed forward, recurrent and convolutional) could enable the creation of $ 3.5–.8 trillion in value annually.
Citi’s Global Technology team sees the rise of AI as the next paradigm shift in the technology sector. IDC forecasts the market size for AI solutions to grow at a 55% compound annual growth rate, from billion in 2016 to billion in 2020, driven by the deployment of AI systems in automated customer service agents, quality management investigation and recommendation systems, diagnosis and treatment systems, and fraud analysis and investigation. Citi forecasts a nine-year compound annual growth rate for AI revenue at +57% and for cognitive computing to more grow more than five-fold from 2019 to 2024.
The outlook for Smart Assistants and the companies that service those Smart Assistants, directly or indirectly, look well placed to grow over the medium term.
In addition to the companies that develop the Smart Assistants, others benefit from the increasing use of Smart Assistants:
Data/Service Providers: In order for Smart Assistants to evolve, there is a need for large volume and variety of labelled-training data, which is a growth opportunity for technology services/data providers.
Home Electronics Manufacturers: The increasing use of Smart Assistants in speakers, TVs, etc. could result in consumers upgrading their home electronics.
Semiconductors: Semiconductor companies are expected to benefit from the increasing use of Smart Assistants and artificial intelligence.
Data Center Providers: We also see data center providers as benefiting from the increased data required to power the AI algorithms.
Compatibility and Integration
Voice technology is becoming increasingly accessible to developers. According to Clear Bridge Mobile research, when it comes to integrating voice technology with other products, Amazon has been ahead of the game. For example, Amazon offers Transcribe, an automatic speech recognition (ASR) service that enables developers to add speech-to-text capability to their applications. Once the voice capability is integrated into the application, users can analyze audio files and in return, receive a text file of the transcribed speech.
Voice User Interface (VUI) Will Continue to Advance
Voice assistants become the hubs of our connected homes and increasingly connected lives.
Whether is finding out information, making a purchase, or achieving a task, voice is the new mobile experience. It’s clear that brands are racing to figure out their voice strategy. With over 100 million Alexa devices being sold alone, there’s a reason why businesses are looking to catch up.
Those who use Alexa will be familiar with the fact that the voice assistant is already integrated into a vast array of products including Samsung’s Family Hub refrigerators. Google has finally caught on and has announced Google Assistant Connect. The idea behind this technology is for manufacturers to create custom devices that serve specific functions and are integrated with the Assistant.
Expect to see a greater interest in the development of voice-enabled devices. This will include an increase in mid-level devices: devices that have some assistant functionality but aren’t full-blown smart speakers. Instead, they communicate with your smart speaker, display or even perhaps your phone over Bluetooth where the processing happens on those devices. Amazon is already well on its way with an Alexa-enabled wall clock.
Google has made moves in making Assistant more ubiquitous by opening the software development kit through Actions, which allows developers to build voice into their own products that support artificial intelligence. Another one of Google’s speech-recognition products is the AI-driven Cloud Speech-to-Text tool which enables developers to convert audio to text through deep learning neural network algorithms.
With the advancements in VUI, companies need to start educating themselves on how they can best leverage voice to better interact with their customers.
However, there are still a number of barriers that need to be overcome before voice applications will see mass adoption. Technological advances are making voice assistants more capable particularly in AI, natural language processing (NLP), and machine learning. To build a robust speech recognition experience, the artificial intelligence behind it has to become better at handling challenges such as accents and background noise. And as consumers are becoming increasingly more comfortable and reliant upon using voice to talk to their phones, cars, smart home devices, etc., voice technology will become a primary interface to the digital world and with it, expertise for voice interface design and voice app development will be in greater demand.
Objectives and Study Scope
This study has assimilated knowledge and insight from business and subject-matter experts, and from a broad spectrum of market initiatives. Building on this research, the objectives of this market research report is to provide actionable intelligence on opportunities alongside the market size of various segments, as well as fact-based information on key factors influencing the market- growth drivers, industry-specific challenges and other critical issues in terms of detailed analysis and impact.
The report in its entirety provides a comprehensive overview of the current global condition, as well as notable opportunities and challenges.
The analysis reflects market size, latest trends, growth drivers, threats, opportunities, as well as key market segments. The study addresses market dynamics in several geographic segments along with market analysis for the current market environment and future scenario over the forecast period.
The report also segments the market into various categories based on the product, end user, application, type, and region.
The report also studies various growth drivers and restraints impacting the market, plus a comprehensive market and vendor landscape in addition to a SWOT analysis of the key players. This analysis also examines the competitive landscape within each market. Market factors are assessed by examining barriers to entry and market opportunities. Strategies adopted by key players including recent developments, new product launches, merger and acquisitions, and other insightful updates are provided.
Research Process & Methodology
We leverage extensive primary research, our contact database, knowledge of companies and industry relationships, patent and academic journal searches, and Institutes and University associate links to frame a strong visibility in the markets and technologies we cover.
We draw on available data sources and methods to profile developments. We use computerised data mining methods and analytical techniques, including cluster and regression modelling, to identify patterns from publicly available online information on enterprise web sites.
Historical, qualitative and quantitative information is obtained principally from confidential and proprietary sources, professional network, annual reports, investor relationship presentations, and expert interviews, about key factors, such as recent trends in industry performance and identify factors underlying those trends - drivers, restraints, opportunities, and challenges influencing the growth of the market, for both, the supply and demand sides.
In addition to our own desk research, various secondary sources, such as Hoovers, Dun & Bradstreet, Bloomberg BusinessWeek, Statista, are referred to identify key players in the industry, supply chain and market size, percentage shares, splits, and breakdowns into segments and subsegments with respect to individual growth trends, prospects, and contribution to the total market.
Research Portfolio Sources:
Global Business Reviews, Research Papers, Commentary & Strategy Reports
M&A and Risk Management | Regulation
The future outlook “forecast” is based on a set of statistical methods such as regression analysis, industry specific drivers as well as analyst evaluations, as well as analysis of the trends that influence economic outcomes and business decision making.
The Global Economic Model is covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. We aim update our market forecast to include the latest market developments and trends.
Review of independent forecasts for the main macroeconomic variables by the following organizations provide a holistic overview of the range of alternative opinions:
As a result, the reported forecasts derive from different forecasters and may not represent the view of any one forecaster over the whole of the forecast period. These projections provide an indication of what is, in our view most likely to happen, not what it will definitely happen.
Short- and medium-term forecasts are based on a “demand-side” forecasting framework, under the assumption that supply adjusts to meet demand either directly through changes in output or through the depletion of inventories.
Long-term projections rely on a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in productivity.
Long-term growth prospects, are impacted by factors including the workforce capabilities, the openness of the economy to trade, the legal framework, fiscal policy, the degree of government regulation.
Direct contribution to GDP
The method for calculating the direct contribution of an industry to GDP, is to measure its ‘gross value added’ (GVA); that is, to calculate the difference between the industry’s total pretax revenue and its total boughtin costs (costs excluding wages and salaries).
Forecasts of GDP growth: GDP = CN+IN+GS+NEX
GDP growth estimates take into account:
All relevant markets are quantified utilizing revenue figures for the forecast period. The Compound Annual Growth Rate (CAGR) within each segment is used to measure growth and to extrapolate data when figures are not publicly available.
Our market segments reflect major categories and subcategories of the global market, followed by an analysis of statistical data covering national spending and international trade relations and patterns. Market values reflect revenues paid by the final customer / end user to vendors and service providers either directly or through distribution channels, excluding VAT. Local currencies are converted to USD using the yearly average exchange rates of local currencies to the USD for the respective year as provided by the IMF World Economic Outlook Database.
Industry Life Cycle Market Phase
Market phase is determined using factors in the Industry Life Cycle model. The adapted market phase definitions are as follows:
The Global Economic Model
The Global Economic Model brings together macroeconomic and sectoral forecasts for quantifying the key relationships.
The model is a hybrid statistical model that uses macroeconomic variables and inter-industry linkages to forecast sectoral output. The model is used to forecast not just output, but prices, wages, employment and investment. The principal variables driving the industry model are the components of final demand, which directly or indirectly determine the demand facing each industry. However, other macroeconomic assumptions — in particular exchange rates, as well as world commodity prices — also enter into the equation, as well as other industry specific factors that have been or are expected to impact.
Forecasts of GDP growth per capita based on these factors can then be combined with demographic projections to give forecasts for overall GDP growth.
Wherever possible, publicly available data from ofﬁcial sources are used for the latest available year. Qualitative indicators are normalised (on the basis of: Normalised x = (x - Min(x)) / (Max(x) - Min(x)) where Min(x) and Max(x) are, the lowest and highest values for any given indicator respectively) and then aggregated across categories to enable an overall comparison. The normalised value is then transformed into a positive number on a scale of 0 to 100. The weighting assigned to each indicator can be changed to reﬂect different assumptions about their relative importance.
The principal explanatory variable in each industry’s output equation is the Total Demand variable, encompassing exogenous macroeconomic assumptions, consumer spending and investment, and intermediate demand for goods and services by sectors of the economy for use as inputs in the production of their own goods and services.
Elasticity measures the response of one economic variable to a change in another economic variable, whether the good or service is demanded as an input into a final product or whether it is the final product, and provides insight into the proportional impact of different economic actions and policy decisions.
Demand elasticities measure the change in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels, taxes.
Demand elasticities can be influenced by several factors. Each of these factors, along with the specific characteristics of the product, will interact to determine its overall responsiveness of demand to changes in prices and incomes.
The individual characteristics of a good or service will have an impact, but there are also a number of general factors that will typically affect the sensitivity of demand, such as the availability of substitutes, whereby the elasticity is typically higher the greater the number of available substitutes, as consumers can easily switch between different products.
The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
Elasticities tend to be greater over the long run because consumers have more time to adjust their behaviour.
Finally, if the product or service is an input into a final product then the price elasticity will depend on the price elasticity of the final product, its cost share in the production costs, and the availability of substitutes for that good or service.
Prices are also forecast using an input-output framework. Input costs have two components; labour costs are driven by wages, while intermediate costs are computed as an input-output weighted aggregate of input sectors’ prices. Employment is a function of output and real sectoral wages, that are forecast as a function of whole economy growth in wages. Investment is forecast as a function of output and aggregate level business investment.